Section 2. Toyota Motor Co., Ltd., Toyota Motor Sales Co., Ltd. to Form Toyota Motor Corporation

Item 5. Increasing Efficiency in Logistics

Promoting improved efficiency

Under the new system, the first issue tackled was the integration of finished-vehicle inspection processes, which had been duplicated between Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd.

Before the merger, finished vehicles were lined up in a section of a Toyota Motor Co., Ltd. yard demarcated by a white line. Toyota Motor Sales Co., Ltd. staff would go there to carry out an inspection and move vehicles that passed to a Toyota Motor Sales Co., Ltd. yard. In addition to the inspection, Toyota Motor Sales Co., Ltd. undertook the fitting of tools, instruction manuals, and other accessories. Not only were the procedures themselves duplicated; as working patterns were also different, with a day-and-night two-shift system at Toyota Motor Co., Ltd. contrasting with daytime-only working at Toyota Motor Sales Co., Ltd., vehicles produced during the night were held in the inspection yard, meaning that the plant needed space to hold nearly twice the number of vehicles produced in one day.

To remedy this, the plan was to eliminate the inspection procedure on the Toyota Motor Sales Co., Ltd. side, and include the fitting of tools and other accessories in the production line operation. The key to success was in building in quality in the assembly process, and not only Toyota's finished vehicle plants, but all vehicle body manufacturers, worked on quality improvement measures. In implementing the new procedure, Toyota remained receptive to dealer and customer comments, carrying out checks and tests to ensure that there were no issues and taking approximately one year to replace the old work procedure.

As a result, finished vehicle holding was minimized, and the number of inspection and transfer yards was also reduced, allowing a reduction of approximately 30 percent in internal and external staffing levels and yard area. So that this rationalization would not negatively impact external contractors, they were commissioned with new operations and some of their employees were taken on as staff as part of a comprehensive set of measures to implement the changes sensitively.

At overseas logistics divisions, meanwhile, the process leading up to the marine shipment of vehicles and spare parts for export was reviewed to reduce the number of days of product holding. Regarding export vehicle logistics bases, after the start of operations at the Tahara Center (now Tahara Yard), which was completed in 1981, most of the Nagoya Port Joint Yard, which had been on lease to Toyota, was returned, nevertheless leaving 37 joint yards here and there. In 1982, therefore, Toyota acquired a site in Tobishima Village, Ama County, Aichi Prefecture (Nagoya Port West Sector 4), and in June 1985, the new export base, Tobishima Wharf Center, was completed. The concentration of yard operations in one place allowed excessive transportation and other operations to be eliminated. By the end of the 1980s, all joint yards had been returned, while the inspection procedure for export vehicles, which had been carried out redundantly, was also successively phased out from 1984.

The reform of logistics operations, which had begun with the merger, proceeded at a rapid pace. The associated improvements led to the spread throughout Toyota, including to dealers, of the Toyota Production System approach, whereby lead time was reduced simultaneously with improvement of service and elimination of muda (wasteful practices). In addition, it had become standard practice among all Toyota-related entities to implement kaizen (continual improvement) characterized by the phrases "not transporting anything other than the necessary items", "creating a structure that can change direction quickly", and "as lead time is logistics time plus holding time, the point is how to reduce holding time".

In this way, in the space of approximately three years after the merger, Toyota came close to reaching its goal of improvements to link production and logistics. Having fulfilled its three-year plan, the Logistics Committee was dissolved in June 1986 and subsequent efficiency measures were implemented as specific programs of individual logistics divisions.

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